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1. Calculate 10 year and 2 year yield curves. Sketch the curves? What do they imply about the future economic growth? YR 10YR 2YR YC10

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1. Calculate 10 year and 2 year yield curves. Sketch the curves? What do they imply about the future economic growth? YR 10YR 2YR YC10 YC2 2012 4.1 3.0 2013 3.7 3.1 2014 3.5 3.2 2015 3.4 3.5 2016 2017 3.2 4.2 2018 2.9 4.6 2019 2.6 4.9 3.4 3.8 2. Calculate and draw a yield curve; show the effects of the liquidity premium (LP) on the curve sketch the curves; what might explain the shapes of the curves 2018? YR i LP YCYC+LP 2011 2.0 0.0 2.0 2.0 Lp

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